* Emerging shares firm but spreads widen on recession fears
* Moody's cuts Latvian ratings, lowers Baltics outlooks
* Turkish lira, South African rand up on weaker dollar
* Emerging European currencies pressured
By Sebastian Tong
LONDON, Nov 7 (Reuters) - Emerging stocks firmed on Friday
after the previous day's losses but gains were curbed as the
release of U.S. jobs data later in the day kept investors
focused firmly on the slowing global economy.
Mid-week euphoria over the election of Barack Obama as next
U.S. President had all but evaporated and the release of the
October U.S. employment report at 1330 is expected to deepen
economic worries <ECON>.
Emerging sovereign debt spreads <11EMJ> widened 14 basis
points as recession fears were stoked by an IMF forecast for
economic contraction on a scale not seen since World War Two,
and emerging European currencies waned against the euro.
The emerging equities benchmark <.MSCIEF>, which has lost
over half its value since the start of the year, was 0.74
percent higher at 561.80 by 1155 GMT, with Romanian <> and
Czech <> shares were among the day's strongest gainers.
"It's difficult to have a sustainable rally when the outlook
for the world economy is as bad as it is and likely to get
worse. We're still at a very early stage in terms of the impact
of the credit crunch on the real economy," said Akber Khan,
equity strategist at Deutsche Bank for Central and eastern
Europe, Middle East and Africa.
"Within emerging markets, emerging Europe is the most
exposed to the dislocation of the global credit markets."
Hungary and Ukraine have secured multilateral aid to avoid
the banking collapse that has already afflicted Iceland.
The International Monetary Fund (IMF) on Thursday approved a
$15.7 billion loan programme for Hungary and agreed to
immediately disburse $6.3 billion of the credit to the
government to help it finance its deficit. []
Ratings agency Moody's cut its credit rating on Latvia to
"A3" from "A2", warning that the global liquidity crisis would
likely cause a shock to the country's banking system, and also
lowered its outlook on Latvia's Baltic neighbours Lithuania and
Estonia. []
Five-year credit default swaps (CDS) on Latvia, used to
insure against debt restructuring or default, rose to around 618
bps from 575 bps at the previous close, data from CMA DataVision
showed.
EMERGING EUROPE WOES
The Turkish lira <TRY=> and South African rand <ZAR=>
benefitted from a weaker dollar to rise over 1 percent but
emerging European currencies were under pressure.
Expectations are growing that the region's policymakers
could follow a Czech move to cut interest rates. The Czech
central bank surprised investors with a bigger-than-expected cut
of 75 bps on Thursday, when the Bank of England and the European
Central Bank also slashed borrowing costs to revive economic
growth.
The crown was among the biggest currency losers, falling
over 1 percent weaker against the euro <EURCZK=> before trimming
losses to trade 0.71 percent lower.
The Polish zloty waned 0.55 percent versus the euro
<EURPLN=> after the country's central bank chief said interest
rates should be cut. []
Hungary, which has had to hike rates to deter investors from
fleeing its currency, saw its forint <EURHUF=> fall as much as
1.5 percent against the common currency. Hungary posted a
weaker-than-expected trade surplus for September although export
growth remained robust. []
"The outlook for 2009 remains uncertain. Trade data released
this morning printed a surplus of 141.1 million euros, however
the risk of a deterioration remains high particularly with
demand slowdown likely," said BNP Paribas in a research note.
(Reporting by Sebastian Tong; Editing by Ruth Pitchford)
